Prime Minister Tony Abbott has acknowledged there has been community concern about his multi-billion-dollar paid parental leave scheme, and says it will be re-worked into a "holistic families package".

Mr Abbott said yesterday that he and his ministers would spend the summer break re-designing the scheme, in a concession that the policy remains unpopular within his own party and does not have enough support to pass the Senate.

He has previously described the scheme as his "signature policy" and has taken it to two elections.

"When I first brought this scheme forward, the Labor Party was promising on stacks of Bibles that we'd be in surplus by now, and obviously we're not," he told the ABC's AM program today.

"There has been a degree of community concern about this, people want to see a decent paid parental leave scheme but they accept that fiscal conditions are tight."

Mr Abbott now says the scheme will be re-worked into a "holistic families package", with savings redirected to child care

He has not given any further details

"We are going to better target it and we are going re-direct the savings into child care because it needs to be a holistic families package and people do want better child care, more available more affordable childcare as well as paid parental leave," he said.

"That's what this government will be working on, that's what my ministers and I will be working on over summer."

Mr Abbott also confirmed the revamped policy would be debated in the party room, meaning coalition MPs and senators will get a chance to air their grievances.

Several MPs have publicly criticised the scheme, arguing it is too expensive in the current economic climate.

"It won't be the first time paid parental leave will be debated in the party room," Mr Abbott said.

"Obviously I've been listening, I accept that when I first brought it forward the fiscal position claimed by Labor was very different."

Treasurer Joe Hockey said Mr Abbott's willingness to alter the policy showed he was paying attention.

"We've been talking about it for a while and the fact is, he listens, we listen," Mr Hockey told Fairfax Radio.

"It is hugely important that we do everything we can to get more Australians into work and facilitate a more flexible work environment, particularly for women coming back into the workforce."

In April, the Commission of Audit recommended lowering the threshold to $28,730 and using the savings to expand child care subsidies.

It recommended merging the childcare benefit and childcare rebate and making the payment available for types of child care not currently covered, including nannies.

"The Commission recognises paid parental leave has the potential to support maternal and child health and increase women's workforce participation," the report said.

"However, steps should be taken to better balance the objectives of the scheme with the need to restore government finances and to target expenditure to those most in need."

Current scheme is sensible, PM should start there: Labor

Shadow treasurer Chris Bowen reiterated Labor's opposition to the scheme, and noted it is not the first time the Prime Minister has been forced to change it.

"Who knows when [the details] will emerge and what a farce this is," Mr Bowen told NewsRadio.

"This is the Prime Minister's signature policy, a policy that he implemented without reference to his shadow cabinet or party room at the time.

"It is an extravagant, unaffordable policy and tells a lie to all of the Government's rhetoric about the age of entitlement when they embark on this frolic of paid parental leave,"

Mr Bowen said Labor's scheme - which gives new mothers the minimum wage for 18 weeks - is sensible and carefully designed.

"We need to see the details. There's a perfectly good, sensible, rational paid parental leave scheme in operation at the moment - the Prime Minister should start there," he said.

It is unclear even after the changes whether the Senate will support the policy.

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